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Our conversation with a coronavirus

Our conversation with a coronavirus

We have all been flummoxed by the way in which the coronavirus called COVID-19 has behaved as if it has agency in the world. We say it “moves,” “adapts,” “evades,” and “tricks us.” We attribute an intelligence to it. We marvel at its ability to manifest itself in so many ways. And everywhere we read COVID-19 is an enemyan invader, and a killer, one that uses stealth to spread itself. We must defeat itwipe it out, and eradicate it.

Many places on the internet we are implored to understand COVID-19 in order to stay safe—but only until such time as we vanquish this foe of humankind with a vaccine.

It occurs to very few people that we might be in a conversation with this coronavirus which is transmitting information to us by its actions and responding to our actions with its own reactions.

The rise of antibiotic resistance is another reminder that we are, in fact, in dialogue with the natural world. Everywhere—after centuries of practicing an ideology that claims we humans can control nature and with the right tools always and everywhere bend it to our will—we are being reminded that we are part of nature, that we are, in fact, organisms in an environment.

The modern environmental movement reintroduced the idea that we humans must align ourselves with the natural world or perish. But much of that movement is now focused on technical fixes such as electric cars designed to enable humans to live pretty much as they have been in the recent past.

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The financialization of the end of the world

The financialization of the end of the world

For those who are fans of cartoons from The New Yorker magazine and consistent readers of this blog, you might be able to guess my two favorite cartoons. In the first one, a man in a coat and tie stands at a podium and tells his unseen audience the following: “And so, while the end-of-the-world scenario will be rife with unimaginable horrors, we believe that the pre-end period will be filled with unprecedented opportunities for profit.”

In the second, a man in a tattered suit sits cross-legged near a campfire with three children listening to him intently as he says this: “Yes, the planet got destroyed. But for a beautiful moment in time we created a lot of value for shareholders.”

Now, in the you-can’t-make-this-stuff-up category, financial writer Paul Farrell used the caption from the first cartoon in a 2015 piece for MarketWatch entitled: “Your No. 1 end-of-the-world investing strategy.” The subheading is: “How to pick stocks for the near term when long-term trends say collapse is near.” The subhead actually seems like it might be another caption from a New Yorker cartoon (or possibly one from The Onion). Why exactly would you invest in stocks—as opposed to seeds of food crops and sturdy garden implements—”when long-term trends say collapse is near”? But I’ll put that down to bad headline writing.

In Farrell’s defense, he frequently used his column in MarketWatch to warn his readers of the coming collapse of modern civilization if we don’t change our ways. He was obliged to give investment advice, of course, because that’s what the column was for.

Few other investment gurus are as intellectually honest as Farrell. Among prominent investment managers, only Jeremy Grantham comes close to understanding the scope of the challenges we face. Grantham wrote a piece in 2013 called “The Race of Our Lives” that outlines the myriad challenges humans face. He starts with a discussion of the fall of civilizations. (He updated his views in 2018.)

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Insanity? Markets continue disconnect from economy and society

Insanity? Markets continue disconnect from economy and society

It’s hard to ignore the protests on the streets of the world’s cities of late. Those protests are coming from a populace who knows that the system they live under long ago stopped benefiting them. While the focus has been the senseless killing by police of an African-American man—all of which was caught on video—there are many other grievances: legalized financial theft by the one percent from the rest of us comes to mind, something that has resulted in growing and egregious inequality across the world.

It’s also hard to overestimate the hardship visited on the world’s people as many have been deprived of income and daily life by up to three months of pandemic-inspired stay-at-home orders and retail shutdowns. As I mentioned in my previous piece, the U.S. Federal Reserve Bank of Atlanta does a frequently updated estimate of U.S. GDP which as of this writing is minus 53.8 percent for the second quarter. (That’s annualized and seasonally adjusted.) The estimate for the current quarter started at minus 12.1 percent and has been dropping like a stone with each new piece of information. For comparison, U.S. GDP during the 2008-2009 financial crises shrank by only 4.2 percent.

And yet, the world’s stock markets are behaving as if the protests and the deprivation are inconsequential. After crashing in March in the wake of the spread of the coronavirus pandemic, major stock market indices are at or near all-time highs. For example, the S&P 500 Index was last around its Friday closing price on February 24, before the coronavirus pandemic market panic. How can this be explained?

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Insuring against catastrophe: The coronavirus predicament

Insuring against catastrophe: The coronavirus predicament

People insure themselves against many types of potential catastrophes: a house fire, a car accident, the untimely death of a spouse, a serious health problem. For other unexpected expenses, prudent people, as we say, save money “for a rainy day.” For some reason people and governments have chosen not to insure themselves (individually or collectively) against two catastrophes that have been much in the news lately: pandemics and large investment losses.

There is a connection, of course, for the two are tightly coupled. Here are some of the similarities between the two:

  1. Both occur at irregular and sometimes very long intervals.
  2. Both require careful thought and regular financial outlays to hedge against.
  3. Despite persistent warnings from experts, most people (and governments) did not act on such warnings.
  4. Now that the worst has occurred, many investment advisors and governments say, “No one could have seen it coming”—even when such a statement can be proven immediately false with easily obtained video evidence!

Will we learn from our current experience?

The answer in some cases will certainly be no because the incentives in our system encourage those in high places to act imprudently. Executives of publicly traded companies have spent trillions of dollars buying back shares of their own companies in order to goose stock prices and make their stock options more valuable—without regard for the need for cash reserves to make it through a recession.

One case that’s making the news is that of the U.S. airline industry. In the past five years the industry as a whole spent $45 billion on stock buybacks in order to enrich top management and shareholders. Now, the industry is asking for $50 billion from taxpayers to bail out profligate managers and their companies. Wouldn’t it be nice if they were asking for only $5 billion instead?

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The Saudi-Russian oil price war tag team: Are things what they seem?

The Saudi-Russian oil price war tag team: Are things what they seem?

To the casual observer Saudi Arabia and Russia, two of the top three producers of oil in the world, have been having a spat about what to do about low oil prices. (See here and here.) Each has accused the other of bad faith and counterproductive behavior. But is that merely what the two oil powers want you to believe?

We’ve been here before. Throughout most of 2016 Saudi Arabia and Russia put on a two-person show for the entire world, pretending time after time to move close to an agreement to lower production in order to prop up oil prices, only to back away or delay at the last minute. The two kept this up for most of 2016. They incited periodic spikes in the oil price without ever having to cut one barrel of production, spikes that kept prices higher for weeks until they drifted back down to levels that reflected reality.

But I believe the most important thing they were trying to achieve then was to create an atmosphere of continuing uncertainty. That uncertainty was supposed to scare investors and lenders away from U.S. shale oil producers who were still hurting from an oil price collapse that began at the end of 2014. Saudi Arabia and Russia wanted to prevent those producers from resurrecting U.S. production and undermining oil prices again. Simply stated, Saudi Arabia and Russia wanted the shale oil industry to go bust in a way that would prevent a recovery for many years. 

But investors and lenders could not be frightened away, and they resumed financing shale oil operations in the United States.

…click on the above link to read the rest of the article…

Overreacting to coronavirus? The perverse logic of panic during a potential pandemic

Overreacting to coronavirus? The perverse logic of panic during a potential pandemic

The best time to panic, that is, overreact to a potential pandemic is shortly after a novel pathogen has been detected. So say famed student of risk, Nassim Nicholas Taleb, author of The Black Swan, and his colleagues. Of course, at that point, by definition few people have the virus and therefore it does not seem like a threat to the whole community.

In hindsight it is perfectly obvious that the extraordinary efforts now being made by individuals and communities across the world to prevent the spread of COVID-19 should have been made in those areas where the virus was first discovered when it appeared. However, it is natural that authorities do not wish to be criticized for “crying wolf” and, if they are elected officials, beaten at the next election for unnecessarily interfering with the life of the community.

But it is precisely what would be called an “overreaction” that might have stopped COVID-19 in its tracks at the beginning. I’ve written previously about those whose jobs are to make sure that small problems never become large and that some problems never even appear. The piece was called “Asymmetrical accolades: Why preventing a crisis almost never makes you a hero.”

In the present case, a doctor, now deceased from coronavirus, who warned Chinese authorities about the spread of the disease, was disciplined and criticized. The Chinese government has now offered a rare apology for its actions. As you can see, only in retrospect are such Cassandras heralded as prescient. (It is worth noting that when someone calls you a Cassandra, you should remind that person that the curse of Cassandra is that her prophesies always turned out to be true though no one ever believed her in advance.)

…click on the above link to read the rest of the article…

Note to EIA: Major shale operator sending cash elsewhere

Note to EIA: Major shale operator sending cash elsewhere

John Hess, CEO of Hess Corporation, a large U.S.-based independent oil producer, recently told a Houston audience where he’s putting the company’s money these days: Offshore drilling.

That should strike those who know of Hess Corporation’s heavy involvement in the Bakken shale play (in North Dakota) as a bit strange. Hess says the company will “use cash flow from the Bakken to invest in longer-term offshore investments.”

Hess told his audience that “key U.S. shale fields are starting to plateau, calling shale ‘important but not the next Saudi Arabia.'” Setting aside whether Hess is actually getting investable cash from the Bakken, the constant refrain from the U.S. oil industry has been precisely that shale plays ARE the next Saudi Arabia.

Someone should send a note to the U.S. Energy Information Administration (EIA) that maybe it’s not all going to work out. If Hess is right about a peak in U.S. shale oil production soon, that peak will come about a decade earlier than the peak forecast by the EIA.

None of this will come as a surprise to geologist David Hughes whose most recent update on U.S. shale oil and natural gas production suggests that not only will Hess be proven generally correct, but that production will fall much farther than the EIA believes in the coming decades. Hughes continues to rate EIA estimates of ultimate recovery from America’s shale oil and natural gas fields as “extremely optimistic, and highly unlikely to be realized.”

U.S. shale oil production has been a major driver in the growth of world oil supplies. Last year the United States accounted for 98 percent of global growth in oil production. Since 2008 the number is 73 percent. It’s not hard to imagine that a slowdown in U.S. oil production growth or worse yet a decline in overall U.S. production would mean trouble for the entire world.

…click on the above link to read the rest of the article…

Code blue: Pandemics and hospital surge capacity in a just-in-time world

Code blue: Pandemics and hospital surge capacity in a just-in-time world

We may be about to see the sad fruits of so-called just-in-time (JIT) inventory systems applied to hospitals in the United States and elsewhere. Fourteen years ago I first wrote about the vulnerabilities of such systems across society including health care systems. (Other observers have more recently noted this problem in health care.) If the corona virus spreads rapidly around the world, those hospitals which have adopted such systems will be least able to cope. 

Here’s why:  JIT systems are designed to minimize inventories in order to free up cash for other useful and profitable purposes. If you no longer have to store large inventories, you don’t need to build and maintain substantial rooms and storage areas for that purpose. And, the money actually invested in those inventories, whether for auto parts or for medical supplies, can be deployed elsewhere to make a profit. With JIT, supplies arrive at your door as you need them. The “storage room,” if it can be called that, is a delivery truck on its way to your loading dock.

The trouble is, a wave of corona virus victims showing up at hospitals could quickly exhaust lean inventories of medical supplies. And, the supplier providing those supplies may quickly run out as demand surges. After all, a smart supplier will be practicing JIT as well.

The JIT mentality has also crept into the area of bed capacity in hospitals. The number of hospital beds available in the United States has dropped dramatically in the past 20 years. The reasons are understandable: more outpatient procedures, earlier discharges, and more home care. Why have extra unused beds sitting empty? Get rid of the excess inventory of beds and all the resources needed to maintain them can be used elsewhere.

…click on the above link to read the rest of the article…

Iran, energy and war

Iran, energy and war

The American obsession with Iran is about oil and natural gas. If these two resources had been absent, it is hard to imagine such an intense American focus on the country from the time of a U.S. Central Intelligence Agency-backed coup of Iran’s elected government in 1953 to today. The Foreign Policy magazine piece linked above is based on declassified CIA documents and summarizes the coup this way: “Known as Operation Ajax, the CIA plot was ultimately about oil.”

This should come as no surprise. Iran was an oil power back in 1953 and it remains one today. Iran is presumed to have the third largest oil reserves in the world and the second largest natural gas reserves. Even if the numbers cited are somewhat inflated, Iran’s reserves are not small, and the country is likely to play a large role in world energy markets for many years to come.

The recent escalation of tensions between the United States and Iran because of the U.S. assassination of a prominent, popular and by all accounts highly effective Iranian general will allow the advocates of war to trot out all manner of excuses for such a war: terrorism, regime change, the credibility of the United States, Iran’s nonexistent nuclear weapons, and the United States’ geostrategic posture vis-à-vis big power rivals such as Russia and China. (Does anyone really know what the last one means?)

What won’t be discussed are the deep historical antagonisms which have developed starting with the 1953 CIA-backed coup. For example, few people remember that the United States supplied economic aid, dual-use (both civilian and military use) technology, training and arms through other countries to Saddam Hussein in the Iran-Iraq War.

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Ocean floor mining: What could possibly go wrong?

Ocean floor mining: What could possibly go wrong?

A recent article on undersea mining in The Atlantic brought back a detailed childhood memory. When I was in fifth grade, my class put on a sort of mini science fair and performance art program for parents. My project focused on the prospect of mining the oceans. I drew a large mural-like color illustration showing a submarine stationed just above the seabed where it hoovered up minerals with large hoses. 

The submarine had wide pipes running from it to the surface where a ship received the nodules of ore gathered by the hoses. During my presentation the classroom was dark, and my mural was illuminated using three small articulating lamps turned on and off by a classmate as I went through the distinct phases of the mining operations in a room meant to mimic the dark and foreboding deep.

It turns out these many years later that my cursory research into ocean mining as a fifth-grader yielded a roughly accurate portrayal of what is about to happen in the oceans starting early in the coming decade. The world’s nations may conclude a treaty governing undersea mining through the auspices of the United Nations as early as next year. Once that is concluded, large scale mining of ocean bottoms is expected to begin.

One method—already in use in coastal waters controlled by individual countries—will be to suck up nodules of ore lying on the seabed with huge vacuums and filter out the sediment that comes with it. This method will move quickly to the deep ocean once the treaty is approved resulting in huge, dense clouds of particles suspended underwater for possibly hundreds of miles from underwater mining sites. Scientists are worried that both the vacuuming and the plumes will destroy entire ecosystems about which we know little.

…click on the above link to read the rest of the article…

Economists and climate change: Building castles in the sky

Economists and climate change: Building castles in the sky

Economist John Kenneth Galbraith once said that “the only function of economic forecasting is to make astrology look respectable.” Unfortunately, when some economists turn their sights on the economics of climate change, their unreliable methods imperil not just the economic life of humankind but its very existence.

I have written previously about this phenomenon in 2007 about how economists underestimate the critical importance of small (by economic value) but critical parts of the economy such as agriculture, forestry, and energy and in 2012 about how unsuited our current infrastructure is to the unfolding climate.

The trouble is that against all evidence, some climate economists keep building castles in the sky. Nobel Prize winner William Nordhaus is among the most prominent economists working on climate change and its economic effects. In short, Nordhaus, who is mentioned both in my 2007 and 2012 pieces, tells us not to worry too much about climate change. It will be cheaper to adapt to it than to prevent it or slow it down.

The problem with Nordhaus’ thinking (and that of many others like him) is that he cannot conceive of abrupt discontinuities in the workings of the planet or the workings of human society. In short, he cannot conceive that climate change could alter our environment so thoroughly and disrupt our agriculture so completely that it would lead to catastrophic results.

It is for this failure of imagination that economist Steven Keen recently took Nordhaus to task, showing through a careful critique of Nordhaus’ equations, that even those equations demonstrate catastrophe ahead when provisioned with the proper numbers and understanding. When Keen adds in what we know about tipping points in the climate system, he finds that Nordhaus’ own equations reveal that “[a]t 3 degrees, damages are 8 times as high.

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Air-conditioning the outside—really

Air-conditioning the outside—really

Qatar is both a country and a peninsula which juts out about 100 miles into the Persian Gulf. It is precisely this geography which makes it both one of the hottest and muggiest places on Earth. The average daily high in mid-summer is 108 degrees F (42 degrees C).

With temperatures now exceeding those averages on a regular basis and nighttime temperatures hovering in the 90s in summer, Qatar has begun working on making the outside cooler.

It had to come. As climate change continues to move temperatures up worldwide, those places that were already hot are getting hotter—and unlivable.

Workers on a U.S. military base in Qatar must now follow strict rest regimens so as not to endanger their well-being on hot days. The Washington Post reports:

The U.S. Air Force calls very hot days “black flag days” and limits exposure of troops stationed at al-Udeid Air Base. Personnel conducting patrols or aircraft maintenance work for 20 minutes, then rest for 40 minutes and drink two bottles of water an hour. People doing heavy work in the fire department or aircraft repair may work for only 10 minutes at a time, followed by 50 minutes of rest, according to a spokesman for the 379th Air Expeditionary Wing.

Cooling units along walkways and outdoor seating areas in Qatar’s cities make it possible for people to stroll or relax in the evening without danger of overheating. Qatar is also engineering ways to cool entire open-air stadiums to make them bearable for spectators.

In my previous post I discussed how our ideas of progress are getting in the way of actual progress in human affairs. While Qatar may be making “progress” in cooling technology, I would not consider it a contribution to the overall progress of humankind. It is actually one more example of the limits we face.

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The biggest obstacle to progress is our idea of progres

The biggest obstacle to progress is our idea of progress

Those who oppose change, even in a single category of life, are often labeled as enemies of “progress.” In the modern era “progress” has become a catch-all word to describe every technological change by the proponents of that change. Thinking people will agree that not all change is progress. But it is striking how infrequently most people actually oppose technological change when it comes.

Often the technological change is billed as a “solution” to a problem created by a previous technological change that was billed as “progress.” The proliferation of air filtering technology comes to mind. I am not opposing air filtering technology, only pointing out that it is not a step forward but rather at most a step sideways to make up for another supposed step forward.

It is logical to assume that making progress toward one’s destination is a good thing. After all, if we have a goal, doing things which allow us to reach that goal seems positive. But this does not touch on the question of whether the goal itself will amount to progress once we get there.

One further thing to note is that “progress” in our modern technical society is almost always defined by others for us. Some corporation, inventor or software genius comes up with a new gadget or process that is then sold as an “improvement” on our current way of doing things. We don’t get to vote on these “improvements.” They are foisted upon us whether we want them or not. This is done partly by exploiting the networking effect. To wit, when everyone you know has a smartphone, they will pressure you to get one because they “need” you to be able to receive their text messages.

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Oops! Gene editing not as precise as advertised

Oops! Gene editing not as precise as advertised

Sometimes a headline gives you practically the entire story. Take this one: “Gene-Editing Unintentionally Adds Bovine DNA, Goat DNA, and Bacterial DNA, Mouse Researchers Find.” The writer details how this happens, of course. And, there is an important subtext. The problem is chalked up by scientists and regulators to incompetence on the part of the company doing alterations to create cattle without horns.

But the real news is this according the author: “[F]oreign DNA from surprising sources can routinely find its way into the genome of edited animals. This genetic material is not DNA that was put there on purpose, but rather, is a contaminant of standard editing procedures.” [My emphasis.]

At the risk of sounding like a broken record (remember records?), as Garrett Hardin, the author of the first law of ecology, reminds us, “we can never merely do one thing.” Why is this truism so hard to accept, so hard that I feel compelled to refer to it in consecutive posts? The simple answer is that as long as there is profit in ignoring it and as long as it is possible to pass the bad consequences on to others, people will act as if Hardin’s first law was never spoken.

Unfortunately, we ignore Hardin in practically everything we do. For example, we discover the convenience of tough, clear plastics and create health damage with the chemical that makes them that way. We later discover that plastic degrades into very tiny particles that are now ubiquitouson the planet and in our bodies as well.

In each case the damage is spread around as the profits mount for the makers. But even they can no longer escape their handiwork. The damage now makes its way into the corporate suites and penthouses.

 …click on the above link to read the rest of the article…

Genetically engineered honeybees: Not the dumbest idea ever, but close to it

Genetically engineered honeybees: Not the dumbest idea ever, but close to it

In the wake of widespread declines in bee populations, farmers and beekeepers are wondering who exactly is going to pollinate that third of the world’s food crops which require pollination. The declines have been attributed to pesticides, parasites and climate change.

In Europe one response has been to phase out a class of pesticides called neonicotinoids. The phase-out has coincided with a revival of bee populations. But pesticides are clearly not the only factor affecting bee health.

Another response has been to consider building a better bee. Enter the geneticists. Why not genetically engineer honeybees to resist those things which are undermining their health?

That seems a little like suggesting that we take carbon out of the atmosphere to address climate change without doing anything about the carbon we are putting into the atmosphere.

Moreover, the original idea behind the genetic engineering of bees is the same as that behind plants and even humans: One gene equals one trait. It turns out there are three problems with this idea. First, genes are multitaskers in honey bees (and in humans, too). That means genes can make more than one kind of protein which means that the idea that one gene always equals one trait has long since been disproved. Second, gene expression depends on a number epigeneticfactors, that is, factors that occur during the development of the organism. Third, the term “trait” has the problem that all words have. It’s ambiguous. (And, if you tell me “trait” has a very precise definition in genetics, then you will almost certainly use words to convey that definition.)

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Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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